Prediction: The LTE Patent Bundle Won't Prevent LTE Patent Lawsuits

from the just-wait-and-see dept

I've been seeing a few folks take the news that a bunch of big telco firms looking to get into the LTE (Long Term Evolution) market have agreed to form a patent pool. Some are even suggesting that this is exactly how the patent system should work. That's wishful thinking at best. LTE is the next generation of wireless technology that many telcos around the world are adopting as their choice for "4G" technology -- and it will be important. However, don't think that just because some companies have agreed to pool patents that it's a good thing. There have been plenty of patent pools in the past, and you can bet that one of two things is likely to happen. First, some other company (or a few other companies, and almost definitely some individual patent holders) will spring up at some point with yet another patent, claiming that LTE technology infringes on that patent and all these firms owe a ton of money. And, given how so many patent holders don't believe in apportioning damages, they'll even claim to want more than all the money being spread around in the pool itself.

But, much more to the point, the fact that so many patents need to be "pooled" just to offer this technology should be a pretty clear warning sign that the patent system isn't working as intended. Basically, what you have here is a patent thicket. Many of the patents in question are overlapping patents that never should have been issued. However, given all the uncertainty around patent litigation (and how the courts will be treating patent issues), most of these firms realize it's better to agree to split the pie rather than sue. That's still not a good result, because it only encourages more companies to suddenly push for these sorts of marginal and totally unnecessary patents just to get included in future patent pools -- even if their "invention" really adds nothing to the technology. Furthermore, this patent pool will automatically increase the price of all LTE technology, making sure that adoption is slowed down. So, yes, it's better to see a patent pool created than to see everyone just jump to lawsuits, but the history of patent pools is littered with additional lawsuits and companies having to pay for patents that they shouldn't be paying for. This is hardly a "good" solution -- it just encourages the bad system to get worse.

Screw Korporations

Prevents evolution of society

Most of these technology patents are holding us back from evolving our society. There's very little in the way of breakthroughs being patented, its all very basic mundane crap that covers solving very simple and mundane problems. Hardly any of it is actually worthy of a patent, and granting some company a patent on "using a resistor to resist the flow of current" is just fucking using things for what they were designed for. You shouldn't be able to patent that. But it's happening every day.

A simple and mundane problem comes up, a perfect nobody engineer grunt works around it as he was trained to do in college (or on wikipedia, hehe), and BAM-O, the company patents his work. Why? cause they can.

One name: WiLAN. As far as they're concerned, they control patents on anything remotely related to OFDM. Another name: Qualcomm: Their acquisition of Flarion gave them a nice OFDM patent portfolio. That LTE patent bundle and $2 will get you a grande bold at Starbucks.

Patent pool is anticompetitive device

Basically that patent pool consists of established cellular equipment vendors and whether the IPR within it is real or not its going to be used to place new entrants (like say handset makers in china) at a disadvantage to the existing established players.

And that is sad.

I'm all for acknowledging and rewarding legitimate innovation but IPR has probably become a means to squash that.

I told you so

Mike, let me first congratulate you on posting this article. I thought for sure that once you stopped posting on your previous patent article you would just ignore any article which didn't agree with your particular dogma. Even though the tone isn't exactly right, IMNSHO, it does show courage on your part to even acknowledge this alternative point of view. Bravo Mike.

I believe that much of the posting here is of the type that too many obvious and overly broad patents get through the system so we should just do away with the system. While the first seem to be prove on a regular basis the second does not automatically follow. While it's true that getting rid of all patents would get rid of the obvious ones also it seems to be a bit of throwing out the baby with the bath water.

Like it or not we live in a technology driven world, not a market driven one. At least not in the classical economic sense, btw that's classical economic theory. If you look at what Smith actually wrote on markets, i.e. no invisible hand, your see that much of what passes as a market today would not be in Smiths time. Likewise the length of time new discoveries are kept secret can be clocked with an egg timer. Smith wrote about people possibly passing on their trade secrets to their children. The rate of change is so great that old approaches seem wildly inappropriate.

On the other hand we do need to invest in R and D. Both research and development. Companies are no longer doing this. Much of the Internet and the World Wide Web were government funded research projects. We need to create a mechanism for researchers, those people who will never bring a product to market, to fund themselves, otherwise others will and we will be surviving on technological scraps.

Call it compulsory licensing call it innovation tax call it government funded research, but if it's not done then the growth in technology, which is really the engine of prosperity will come to a screeching halt.

Re: I told you so

Mike, let me first congratulate you on posting this article. I thought for sure that once you stopped posting on your previous patent article you would just ignore any article which didn't agree with your particular dogma.

Huh? Do you read Techdirt? I post stuff that disagrees with me all the time, in order to explain why I think it's wrong... which is exactly what I did here. Why would I ignore something that furthers the discussion?

I believe that much of the posting here is of the type that too many obvious and overly broad patents get through the system so we should just do away with the system. While the first seem to be prove on a regular basis the second does not automatically follow.

Indeed, the second does not follow from the first -- but you're wrong about the first assumption. The problem isn't bad patents (though that makes the system worse). The problem that we've been highlighting is how patents screw up the market and slow down innovation.

Like it or not we live in a technology driven world, not a market driven one.

I really don't know how to respond to such an assertion. How do you figure?

At least not in the classical economic sense, btw that's classical economic theory. If you look at what Smith actually wrote on markets, i.e. no invisible hand, your see that much of what passes as a market today would not be in Smiths time.

You do realize that "classical" economics moved on from Smith a long time ago... (and, I'm curious as to why you would claim that Smith doesn't believe in the invisible hand, considering he coined the term -- even if it was a minor point in The Wealth of Nations).

On the other hand we do need to invest in R and D. Both research and development. Companies are no longer doing this.

Got some numbers to back that up?

We need to create a mechanism for researchers, those people who will never bring a product to market, to fund themselves, otherwise others will and we will be surviving on technological scraps.

What's wrong with the market mechanism? If someone doesn't want to bring a product to market themselves, then get hired by a company that does, or find an investor and or partner who will build a company around that research.

That's how silicon valley works, by the way...

Call it compulsory licensing call it innovation tax call it government funded research, but if it's not done then the growth in technology, which is really the engine of prosperity will come to a screeching halt.

Why? You make that assertion with absolutely no proof that market mechanisms are not appropriate. Considering in the past you've attacked me for making blanket statements, I've got to call you on doing the same thing.

Re: Re: I told you so

Mjr1007 wrote:
Mike, let me first congratulate you on posting this article. I thought for sure that once you stopped posting on your previous patent article you would just ignore any article which didn't agree with your particular dogma.

Mike resplied:
Huh? Do you read Techdirt? I post stuff that disagrees with me all the time, in order to explain why I think it's wrong... which is exactly what I did here. Why would I ignore something that furthers the discussion?

Mjr1007 replied:
Well, because you stopped posting on the last topic and you never did post the article about Intel being sued by Wisconsin's research arm for allegedly just taking someone else's work.

Mjr1007 wrote:
I believe that much of the posting here is of the type that too many obvious and overly broad patents get through the system so we should just do away with the system. While the first seem to be prove on a regular basis the second does not automatically follow.

Mike replied:
Indeed, the second does not follow from the first -- but you're wrong about the first assumption. The problem isn't bad patents (though that makes the system worse). The problem that we've been highlighting is how patents screw up the market and slow down innovation.

Mjr1007 resplied:
You said
“First, some other company (or a few other companies, and almost definitely some individual patent holders) will spring up at some point with yet another patent, claiming that LTE technology infringes on that patent “

Seems like a problem with overly broad or obvious patents, but I could be wrong.

Hellsvilla wrote:
“A simple and mundane problem comes up, a perfect nobody engineer grunt works around it as he was trained to do in college (or on wikipedia, hehe), and BAM-O, the company patents his work. Why? cause they can. “

wirelessman wrote:
One name: WiLAN. As far as they're concerned, they control patents on anything remotely related to OFDM. Another name: Qualcomm: Their acquisition of Flarion gave them a nice OFDM patent portfolio. That LTE patent bundle and $2 will get you a grande bold at Starbucks.

Seems like an overly broad patent, but I could be wrong.

Mjr1007 wrote:
Like it or not we live in a technology driven world, not a market driven one.

At least not in the classical economic sense, btw that's classical economic theory. If you look at what Smith actually wrote on markets, i.e. no invisible hand, your see that much of what passes as a market today would not be in Smiths time.

Mike replied
I really don't know how to respond to such an assertion. How do you figure?

You do realize that "classical" economics moved on from Smith a long time ago... (and, I'm curious as to why you would claim that Smith doesn't believe in the invisible hand, considering he coined the term -- even if it was a minor point in The Wealth of Nations).

Mjr1007 replied:
Because it appeared exactly once and it had to do with how capital (stock) is invested not markets. Smith was pretty clear about the market and did not mention the invisible hand there. In fact he cautioned about people trying to narrow the competition.
Today I believe they call it rent seeking behavior, which seems to be a part of virtually every major corporation's approach. Limit competition by raising barriers to entry into the market.

Mjr1007 wrote:
On the other hand we do need to invest in R and D. Both research and development. Companies are no longer doing this.

Seems a little rich you asking for citations. Does this mean you will still citing as well?

Mjr1007 wrote:
We need to create a mechanism for researchers, those people who will never bring a product to market, to fund themselves, otherwise others will and we will be surviving on technological scraps.

Mike replied:
What's wrong with the market mechanism? If someone doesn't want to bring a product to market themselves, then get hired by a company that does, or find an investor and or partner who will build a company around that research.

That's how silicon valley works, by the way...

mjr1007 replied:
That is just poor management. Take an excellent basic research resource and turn them into a poor management resource. Or let them work for a company that hasn't a clue where the next big thing is coming from and will waste this great basic researchers talents on something they are ill suited for.

Just answer a simple straight forward question. Do you think basic research is important?

Call it compulsory licensing call it innovation tax call it government funded research, but if it's not done then the growth in technology, which is really the engine of prosperity will come to a screeching halt.

Why? You make that assertion with absolutely no proof that market mechanisms are not appropriate. Considering in the past you've attacked me for making blanket statements, I've got to call you on doing the same thing.

Same old tired stuff. You admitted in the short term markets are manipulated by large corporations. If the markets were truly self correcting there would be a ton of companies competing in the desktop OS market with M$, because of the extraordinary profits they are making. M$'s rent seeking behavior has made it very difficult. There is an extremely high barrier to entry and if you read the emails from the antitrust cases you will see their management seem more concerned with crushing the competition then creating world class products. IMHO

We constantly see the same thing, deregulate, bail out, re-regulate. Doesn't really seem like the sort of thing that a self correcting market would do. The problem with economics is that there are tons of schools, all with a different opinion on how things work. Which means they really don't have a clue.

And as far a markets being self correcting there are so many problems, dilemmas, hazards, conundrums, quandaries, predicaments, paradoxes, tragedies, fiasco, debacle, disaster, and so on it's hard to see the “normal case” of a self correcting market.

Re: Re: Re: I told you so

Ah, I see your problem. You seem to think that R&D only means big company spending marked "R&D". That's not how it works however.

That is generally a black hole. The real R&D is often coming from smaller companies that don't call it R&D -- they call it building new and interesting products.

That is just poor management. Take an excellent basic research resource and turn them into a poor management resource.

When did I say to turn them into a mgmt resource? I said no such thing. In fact, I think I pretty clearly stated that the researcher has options to have that mgmt structure built around them.

Same old tired stuff. You admitted in the short term markets are manipulated by large corporations. If the markets were truly self correcting there would be a ton of companies competing in the desktop OS market with M$, because of the extraordinary profits they are making.

Heh. Not quite. The statement above has so many problems, it's hard to know where to start.

First, part of the problem with the market for OS's is *exactly* the problem we're discussing here -- which is that Microsoft has saber rattled that it will sue opposing OS companies with patents it holds. See? Patents preventing competition...

Furthermore, there *are* companies that are competing in the OS market -- and some are doing things in a very different manner. You may not realize it, but Google is doing a very good job shrinking Microsoft's *OS* market without many people realizing it.

Next, you totally ignore the power of network effects, which need to be taken into account, and are an economic function.

But, most importantly, just take a look at history and see how each dominant platform provider didn't end up lasting -- even when they had a so-called "monopoly" on the space.

Markets do self-correct and they are.

We constantly see the same thing, deregulate, bail out, re-regulate. Doesn't really seem like the sort of thing that a self correcting market would do.

Um, not quite. That's a beautiful blanket statement, but ignores that every "deregulated" market actually had plenty of regulations that either built them up or that kept them going, despite the "deregulatory" claims.

The problem with economics is that there are tons of schools, all with a different opinion on how things work. Which means they really don't have a clue.

Ah, right, so because not everyone agrees, it's all bunk and we should trust you?

Sorry.

And as far a markets being self correcting there are so many problems, dilemmas, hazards, conundrums, quandaries, predicaments, paradoxes, tragedies, fiasco, debacle, disaster, and so on it's hard to see the “normal case” of a self correcting market.

No one ever said markets are perfect. But, you failed to explain why your method is *better* than the open market.

Re: Re: Re: Re: I told you so

Ah, I see your problem. You seem to think that R&D only means big company spending marked "R&D". That's not how it works however.

That is generally a black hole. The real R&D is often coming from smaller companies that don't call it R&D -- they call it building new and interesting products.

Mjr1007 replied
Nice to see you are back to your old tricks Mike, and I had such high hopes after reading your Wikipedia article. Your counter example of brain surgery from Britannica was excellent. Not so much here.

You have conflated Research (R) with Development (D) and they are not the same thing. I just find it hard to believe that any Vulture Capitalist (VC) would fund a basic researcher with no plans for products and just a general area of interest. But if you have examples of Basic Research being funded in Silicon Valley then please by all means cite it. Oh right, I forgot, citations are for others not for Mike.

While we're on the subject of Basic Research Mike answer the questions, do you think it's important and if so how would you propose to fund it? Oh right, I forgot, Mike doesn't answer questions he only ask them.

By holding others to a higher standard the you hold yourself to, you open yourself up to these types of criticisms.

Mjr1007 wrote:
That is just poor management. Take an excellent basic research resource and turn them into a poor management resource.

Mike replied
When did I say to turn them into a mgmt resource? I said no such thing. In fact, I think I pretty clearly stated that the researcher has options to have that mgmt structure built around them.

Mjr1007 replied
This actually shows a stunning lack of understanding on how engineering management works and the frictions such a scheme would cause. Like most, you seem to dismiss anything you don't understand. Let's assume we go with your suggestion and A Miracle Occurs (AMO) and it works. Not very likely but for the purposes of this discussion we're just pretend. You've still turned a great Basic Researcher into a mediocre Developer. The time spent trying to bring a product to market is time this Basic Researcher is not spending doing MORE BASIC RESEARCH!

Mjr1007 wrote:
Same old tired stuff. You admitted in the short term markets are manipulated by large corporations. If the markets were truly self correcting there would be a ton of companies competing in the desktop OS market with M$, because of the extraordinary profits they are making.

Mike replied
Heh. Not quite. The statement above has so many problems, it's hard to know where to start.

First, part of the problem with the market for OS's is *exactly* the problem we're discussing here -- which is that Microsoft has saber rattled that it will sue opposing OS companies with patents it holds. See? Patents preventing competition...

mjr1007 replied:
Saber rattling on patents is just the latest rent seeking behavior M$ is using. If you look at all of the legal trouble M$ got into earlier, patents had nothing to do with it. Again this is just selective memory on your part.

I do have another question which you probably won't answer, but are you suggesting that M$ not only drop it's patent claims but also it's copyright claims. In other words let anyone make a copy of their OS without having to pay a fee?

Mike droned on
Furthermore, there *are* companies that are competing in the OS market -- and some are doing things in a very different manner. You may not realize it, but Google is doing a very good job shrinking Microsoft's *OS* market without many people realizing it.

Mjr1007 replied:
Once again, nice bit of rhetoric. The actual quote was “Desktop OS”. There was a recent article on Slashdot which said that the latest Linux Summit ignored the desktop.

Mike continues to drone on:
Next, you totally ignore the power of network effects, which need to be taken into account, and are an economic function.

But, most importantly, just take a look at history and see how each dominant platform provider didn't end up lasting -- even when they had a so-called "monopoly" on the space.

Markets do self-correct and they are.

Mjr1007 replied:
Hold your breath here Mike, but I actually think you have a point here. In fact it goes beyond what you are saying here, because Google has figured out that the other 5 Billion people on the planet who will never own a PC and that cell phones are the way to go, for them to surfing the Internet.

And to think it only took 30 years to self correct. Who wouldn't think this is a great system. Of course over the long haul any technology will become irrelevant. In the semiconductor space products do get eaten up from below. But 30 years of virtual monopoly power means more money then anyone could possible know what to do with. I think Bill has made his point, I hope I've made mine.

Mjr1007 wrote:
We constantly see the same thing, deregulate, bail out, re-regulate. Doesn't really seem like the sort of thing that a self correcting market would do.

Mike replied:
Um, not quite. That's a beautiful blanket statement, but ignores that every "deregulated" market actually had plenty of regulations that either built them up or that kept them going, despite the "deregulatory" claims.

Mjr1007 replied:
Oh come on Mike this is silly even for you. Really, sometimes you are so predictable. This is the sort of silliness that one would expect from a hack. Could you really be saying that the sub-prime mortgage mess was cause by insufficient deregulation of lenders. If you really think regulations are such a bad thing, go fly on airlines that are not under regulations. As they say in the Federal Aviation Administration (FAA) Airworthiness Directives (ADs) are written in blood.

Mjr1007 wrote:
The problem with economics is that there are tons of schools, all with a different opinion on how things work. Which means they really don't have a clue.

Mike replied:
Ah, right, so because not everyone agrees, it's all bunk and we should trust you?

Sorry.

Mjr1007 replied:
Nice rhetoric but lousy reasoning. Really nice false dichotomy of either them or me. You could, as a very simple counter example, trust neither. The point here is that economics is not physics. At times it barely seems like science at all. In science, to be a theory, it needs to make predictions which can be tested. In the case of a self correcting market you need to actually see the market self correct. The prediction is that because the DESKTOP OS space is generating extraordinary profits others will enter it and compete. History has show that to be false. The prediction wasn't that eventually the desktop will become irrelevant. Therefore the theory needs to be revised. In this case it seems that additional parameters need to be added. The self correction can be delayed by rent seeking behavior of the major player(s). Which would mean that markets are not automatically self correcting. Clearly the desktop space is not a market and has not self corrected.

Saying that eventually PCs will be eaten up from below is not really a self correcting market but rather the inevitable march of technology. Which was one of my original points, technological advancement not the so called “market” is driving progress.

Mjr1007 wrote
And as far a markets being self correcting there are so many problems, dilemmas, hazards, conundrums, quandaries, predicaments, paradoxes, tragedies, fiasco, debacle, disaster, and so on it's hard to see the “normal case” of a self correcting market.

Mike whinnied:
No one ever said markets are perfect. But, you failed to explain why your method is *better* than the open market.

Mjr1007 replied:
First off, come on Mike, throw me a bone here. Listing all of the issues with markets was pretty good. It had a nice flow to it. It was not only good rhetoric but good reasoning. Even if you disagree with it, it was a nifty sentence.

You are right Mike, no one ever said markets are perfect, that includes me. What was said was they are not self correcting. Again great rhetoric but lousy reasoning. First, misstate what was said and then attack your opponent. Really this is just text book rhetoric.

I failed to say why my approach was better then an open (free?) market because what I'm proposing actually opens up the market of ideas. Despite the rancor we actually agree on the definition of the problem. Monopoly is the enemy of good management. Granting a monopoly on ideas one of the worse of all. On the other hand Research and Development (R&D) not just Development is the key to progress. As with most designs there are tradeoffs to be made.

At the time of the writing of the US Constitution the industrial revolution was underway but may not have been seen as the all powerful force that 20/20 hindsight has shown it to be. Of course in the current era, where product life cycles are measured in months not years, many of the problems with patents has surfaced. While the US Constitution states exclusive rights the courts have granted wide latitude in this area. Compulsory licensing of songs is an obvious example. To stay within the bounds of the Constitution the Congress could simply give 1 day of exclusive use or many years of compulsory licensing.

Most of your criticisms about the LTE approach were addressed in my recommendation. Put all patents under compulsory licensing and let the manufacturers license them without there having to be an agreement on what percentage goes to whom. I thought it was nice that you used the advantages of my suggestions to shoot down the LTE approach. BTW this is the first time I had heard of the LTE deal. Nice to know thought that others are on the same track, dare I say, the right track.

Re: Re: Re: Re: Re: I told you so

It's nearly impossible to debate with you, in part because you repeatedly take my statements out of context.

You have conflated Research (R) with Development (D) and they are not the same thing. I just find it hard to believe that any Vulture Capitalist (VC) would fund a basic researcher with no plans for products and just a general area of interest. But if you have examples of Basic Research being funded in Silicon Valley then please by all means cite it. Oh right, I forgot, citations are for others not for Mike.

I didn't say they fund basic research for the sake of basic research. I said that someone working on basic research could get funded to have that research commercialized.

While we're on the subject of Basic Research Mike answer the questions, do you think it's important and if so how would you propose to fund it? Oh right, I forgot, Mike doesn't answer questions he only ask them.

That's right. I never answer questions. That's why I waste so much time responding to your questions all the time.

There are plenty of ways to fund basic research that have nothing to do with patents. The gov't has always been a big funder of basic research without needing the results to go into a monopoly. Plenty of companies do basic research as well.

Besides, because that basic research becomes important to the eventual development stage, then it makes sense for companies to fund that basic research. So I'm not really sure why you think we need some artificial construct when the market can take care of it.

This actually shows a stunning lack of understanding on how engineering management works and the frictions such a scheme would cause. Like most, you seem to dismiss anything you don't understand. Let's assume we go with your suggestion and A Miracle Occurs (AMO) and it works. Not very likely but for the purposes of this discussion we're just pretend. You've still turned a great Basic Researcher into a mediocre Developer. The time spent trying to bring a product to market is time this Basic Researcher is not spending doing MORE BASIC RESEARCH!

Except that's not what I said. I send the basic researcher can be funded and an infrastructure can be put around him to commercialize the basic research. That doesn't mean the researcher needs to stop doing research. Why would you say that I said otherwise.

It's a troubling pattern on your part.

You accuse me of all sorts of "tricks" in what I write, but so far it appears that you are the one playing tricks.

Saber rattling on patents is just the latest rent seeking behavior M$ is using. If you look at all of the legal trouble M$ got into earlier, patents had nothing to do with it. Again this is just selective memory on your part.

Ah, yes, you chalk up one point of many to 'selective memory' leaving out that I discussed many of the other reasons.

Once again, nice bit of rhetoric. The actual quote was “Desktop OS”. There was a recent article on Slashdot which said that the latest Linux Summit ignored the desktop.

Wow. My point totally went over your head there. I said that Google was decreasing Microsoft's OS market, and I meant for desktop OSs. Think about it a little and maybe you'll figure out why.

Could you really be saying that the sub-prime mortgage mess was cause by insufficient deregulation of lenders. If you really think regulations are such a bad thing, go fly on airlines that are not under regulations. As they say in the Federal Aviation Administration (FAA) Airworthiness Directives (ADs) are written in blood.

I never said all regulation is bad (again with your misstatements of my position). But the mortgage crisis *was* caused by over regulation, but not of the lending industry, but of monetary policy.

The point here is that economics is not physics. At times it barely seems like science at all. In science, to be a theory, it needs to make predictions which can be tested. In the case of a self correcting market you need to actually see the market self correct.

Actually, economics is rather like physics. The problem, though is that there are many more variables to deal with in the real world, so it's quite difficult to account for them all. But, economics also has its theories that allows you to make predictions and test them. In fact, that's what we do all the time. What makes it trickier is the number of variables at play. It's just not a simple regression equation...

The prediction is that because the DESKTOP OS space is generating extraordinary profits others will enter it and compete. History has show that to be false. The prediction wasn't that eventually the desktop will become irrelevant.

Well, when you define it that way, then you tested the wrong theory. Competition doesn't need to mean direct competition. That's the whole point, in fact. Competition should mean INNOVATION, meaning another company attacking the market differently -- in a way that's better and more efficient.

When you insist that competition needs to mean an exact copy, then you're living in a fantasy world.

The self correction can be delayed by rent seeking behavior of the major player(s). Which would mean that markets are not automatically self correcting.

You make a big leap there -- in that you skip over the part where you understand WHY a company is able to rent seek. Go back and explore that a bit...

Saying that eventually PCs will be eaten up from below is not really a self correcting market but rather the inevitable march of technology. Which was one of my original points, technological advancement not the so called “market” is driving progress.

Uh. No. The march of technology is not inevitable without markets. You're confusing cause and effect.

What was said was they are not self correcting.

If markets are not self-correcting, then you should be looking at *why* they're not self-correcting. And, in many cases, you'll find it's because of regulations or things like granted monopolies.

I failed to say why my approach was better then an open (free?) market because what I'm proposing actually opens up the market of ideas. Despite the rancor we actually agree on the definition of the problem. Monopoly is the enemy of good management. Granting a monopoly on ideas one of the worse of all. On the other hand Research and Development (R&D) not just Development is the key to progress.

Again, as I already stated, since the R is so important to the D, anyone who wants to be involved in the D has incentive to fund the R. An understanding of the Coase theorem will help you here... You don't need an artificial construct. The R will get funded, if only because the D needs it.

Compulsory licensing of songs is an obvious example. To stay within the bounds of the Constitution the Congress could simply give 1 day of exclusive use or many years of compulsory licensing.

Again, history has shown that compulsory licensing distorts the market in unnecessary ways. You keep claiming that this is a better model, but fail to provide any evidence against the wide history of evidence showing that an open market tends to be more efficient.

Put all patents under compulsory licensing and let the manufacturers license them without there having to be an agreement on what percentage goes to whom.

And all that does is getting people doing research to get a *patent* not for the sake of development. You distort the market in dangerous ways. If you look closely at the pharma industry today you'll see what happens with the model you discuss. It's not pretty.

BTW this is the first time I had heard of the LTE deal. Nice to know thought that others are on the same track, dare I say, the right track.

Yikes. It's the first time you've heard of a patent pool?

I'd suggest you do a little research on patent thickets and take a look at how patent pools have worked out historically.

Re: Re: Re: Re: Re: Re: I told you so

Mjr1007 wrote:
After reading only part of your post I check the time stamp, and as I thought it was the 0300 effect again. Get some sleep guy, your posts shows it.

Mike wrote:
It's nearly impossible to debate with you, in part because you repeatedly take my statements out of context.

Mjr1007 replied:
That's a very interesting comment, especially since I ALWAYS copy your entire post in my response. You on the other hand, seem to edit out the bits that you don't like. It reminds me of a legal strategy I heard Joe Califano quote “If the law is on your side argue the law, if justice is on your side argue for justice, if neither is on your side make a personal attack”. If I'm trying to take your statements out of context then why on earth would I include your entire post? It seems counter intuitive to take something out of context while including the context. All I can say here is 0300.

mjr1007 wrote:
You have conflated Research (R) with Development (D) and they are not the same thing. I just find it hard to believe that any Vulture Capitalist (VC) would fund a basic researcher with no plans for products and just a general area of interest. But if you have examples of Basic Research being funded in Silicon Valley then please by all means cite it. Oh right, I forgot, citations are for others not for Mike.

Mike replied:
I didn't say they fund basic research for the sake of basic research. I said that someone working on basic research could get funded to have that research commercialized.

mjr1007 wrote:
A little bit of creative editing goes a long way eh Mike. If you go back through the post you will see I'm talking about Research and your reply is small companies. If you RTFA you would have seen that companies are shutting down there Basic Research efforts in favor of Development. Commercializing Basic Research is NOT the same thing as performing Basic Research. This seem like a pretty obvious point. Oh well 0300.

mjr1007 wrote:
While we're on the subject of Basic Research Mike answer the questions, do you think it's important and if so how would you propose to fund it? Oh right, I forgot, Mike doesn't answer questions he only ask them.

Mike replied:
That's right. I never answer questions. That's why I waste so much time responding to your questions all the time.

There are plenty of ways to fund basic research that have nothing to do with patents. The gov't has always been a big funder of basic research without needing the results to go into a monopoly. Plenty of companies do basic research as well.

Besides, because that basic research becomes important to the eventual development stage, then it makes sense for companies to fund that basic research. So I'm not really sure why you think we need some artificial construct when the market can take care of it.

Mjr1007 replied:
Actually, your responses rarely answer specific question. They seem to be more of the “I'm right your wrong” variety without specifics or citations. But if you are in the question answering mood how about these from our previous discussion, Did you publish your economic research in a peer reviewed journal and have you ever take a symbolic logic course?

I find it fascinating that a guy who berates the government at virtually every turn goes running to that same government for Basic Research. Hypocrisy aside, where is the government going to get the money to fund the Basic Research? This falls under the no free lunch category. Given your previous stands it would seem reasonable to minimize the government's involvement in such important work.

Clearly you didn't RTFA since the article was talking about companies no longer funding Basic Research. Mike it's one thing for you not to cite but it's another not to bother to even read the citations of others. A little 0300 here maybe?

mjr1007 wrote:
This actually shows a stunning lack of understanding on how engineering management works and the frictions such a scheme would cause. Like most, you seem to dismiss anything you don't understand. Let's assume we go with your suggestion and A Miracle Occurs (AMO) and it works. Not very likely but for the purposes of this discussion we're just pretend. You've still turned a great Basic Researcher into a mediocre Developer. The time spent trying to bring a product to market is time this Basic Researcher is not spending doing MORE BASIC RESEARCH!

Mike replied:
Except that's not what I said. I send the basic researcher can be funded and an infrastructure can be put around him to commercialize the basic research. That doesn't mean the researcher needs to stop doing research. Why would you say that I said otherwise.

It's a troubling pattern on your part.

You accuse me of all sorts of "tricks" in what I write, but so far it appears that you are the one playing tricks.

Mjr1007 replied:
Once again Mike you have conflated Basic Research with Development (commercialization). They are not the same thing and funding Development does not solve the funding Basic Research problem.

Please be specific as to what tricks you think I'm using. I try to be diligent in this regard with you. I point out false premises, flawed reasoning, often citing the rhetorical device you use and of course cite articles to back up my opinions. Please Mike MAKE ME A LIAR, show where I've take you out of context or have relied solely on rhetoric to try to make a point!

mjr1007 wrote:
Saber rattling on patents is just the latest rent seeking behavior M$ is using. If you look at all of the legal trouble M$ got into earlier, patents had nothing to do with it. Again this is just selective memory on your part.

Mike replied:
Ah, yes, you chalk up one point of many to 'selective memory' leaving out that I discussed many of the other reasons.

“First, part of the problem with the market for OS's is *exactly* the problem we're discussing here -- which is that Microsoft has saber rattled that it will sue opposing OS companies with patents it holds. See? Patents preventing competition.. “

My response was saber rattling is just the latest in a long line of rent seeking behaviors. You did not mention the other rent seeking behaviors. This caused me to accuse you of selective memory.

Mjr1007 wrote:
Once again, nice bit of rhetoric. The actual quote was “Desktop OS”. There was a recent article on Slashdot which said that the latest Linux Summit ignored the desktop.

Mike replied:
Wow. My point totally went over your head there. I said that Google was decreasing Microsoft's OS market, and I meant for desktop OSs. Think about it a little and maybe you'll figure out why.

Mjr1007 replied:
Once again selective edits and taking things out of context. I was merely pointing out that you changed the space from Desktop OS to OS which is a nice bit of rhetoric. In fact if memory servers, M$ tried the same thing in their court case. Didn't work then and won't work now. It was a minor point though.

The part of my response that you edited out included talking about cell phones being the way the other 5 billion people will surf the Internet and how Google is way ahead there. Maybe you didn't get it. The point was that having a virtual monopoly for Desktop OSes for almost 30 years hardly seems like a self regulating market. Where are all the competitors trying to get their piece of those extraordinary profits?

Now compare that with search. Lots of companies trying and Google is doing a nice job of beating their brains in with innovation. See I'm making your point here. Markets can work but they certainly didn't work in the Desktop OS space. Even more of your point, Google allows individuals to research things of interest to them. All in all probably one of the best run engineering companies around. But it's only one company and in the grand scheme of things handles a really small piece of the technology world. Google is very unique in this regard. If all companies did this we probably would not be having this discussion. But even with all of Google's advantages, it doesn't seem like they are doing a lot of basic research, and certainly not outside the world of Web 2.0. Not being privy to the inner workings of Google I can only say what appears to an observer.

Of course all of these nice comments about Google may not last. There were a small feisty start up and that's still part of their DNA. It will be interesting to see what happens when they stop growing by 30% a year. Will they too be tempted to start rent seeking. It's an interesting question which only time will tell. If I was a betting man I would say at some point, when their primary markets mature, you will see a change in leadership and rent seeking will ensue. But that's just a guess.

Mjr1007 wrote:
Could you really be saying that the sub-prime mortgage mess was cause by insufficient deregulation of lenders. If you really think regulations are such a bad thing, go fly on airlines that are not under regulations. As they say in the Federal Aviation Administration (FAA) Airworthiness Directives (ADs) are written in blood.

Mike wrote:
I never said all regulation is bad (again with your misstatements of my position). But the mortgage crisis *was* caused by over regulation, but not of the lending industry, but of monetary policy.

Mjr1007 replied:
It can be deduced from your statement, trying not to put words in your mouth, that the lax regulation on home loans had nothing to do with the sub-prime mess? Giving people loans they really didn't qualify for, on houses that really weren't worth the appraised value. was not the cause, but rather monetary policy was. Once again I'm going with the 0300 effect.

Mjr1007 wrote:
The point here is that economics is not physics. At times it barely seems like science at all. In science, to be a theory, it needs to make predictions which can be tested. In the case of a self correcting market you need to actually see the market self correct.

Mike replied:
Actually, economics is rather like physics. The problem, though is that there are many more variables to deal with in the real world, so it's quite difficult to account for them all. But, economics also has its theories that allows you to make predictions and test them. In fact, that's what we do all the time. What makes it trickier is the number of variables at play. It's just not a simple regression equation...

mjr1007 replied:
OK then, what is the self correcting market mechanism and on what time scale are you claiming it works.

Mjr1007 wrote:
The prediction is that because the DESKTOP OS space is generating extraordinary profits others will enter it and compete. History has show that to be false. The prediction wasn't that eventually the desktop will become irrelevant.

Mike replied:
Well, when you define it that way, then you tested the wrong theory. Competition doesn't need to mean direct competition. That's the whole point, in fact. Competition should mean INNOVATION, meaning another company attacking the market differently -- in a way that's better and more efficient.

When you insist that competition needs to mean an exact copy, then you're living in a fantasy world.

Mjr1007 replied:
Again, so I don't put words in your mouth but it can be deduced from what you wrote that even after decades of extraordinary profits and no competition in a particularly large space the market can still be considered self correcting. 0300! This is utter rubbish. Mike, that dog won't hunt!

Mjr1007 wrote:
The self correction can be delayed by rent seeking behavior of the major player(s). Which would mean that markets are not automatically self correcting.

Mike wrote:
You make a big leap there -- in that you skip over the part where you understand WHY a company is able to rent seek. Go back and explore that a bit...

mjr1007 replied:
Again vague generalities with no hope of confronting what you said since you can always claim to have been saying something else. Great rhetoric but lousy reasoning. See Mike, specific criticisms of specific paragraphs.

OK let's try to guess what's on the mind of Mike.
Rent seeking behavior occurs when:
1) The government grants a monopoly
2) The producers collude
3) The major producer is guilty of anticompetitive behavior.

My guess is that you are going to go with 1 and ignore 3, but again since you haven't really said anything here it's all speculation on my part. To be fair, maybe at 0300 it seem clear to you but it really isn't. A few details would be nice.

Mjr1007 wrote:
Saying that eventually PCs will be eaten up from below is not really a self correcting market but rather the inevitable march of technology. Which was one of my original points, technological advancement not the so called “market” is driving progress.

Mike replied:
Uh. No. The march of technology is not inevitable without markets. You're confusing cause and effect.

Mjr1007 replied:
Interesting response here. Good use of rhetoric. You are using polysimy here to make a point that you otherwise couldn't. It also ignores supply side economics, Say's law ... There is demand pull but there is also supply push. When personal computers (pre IBM PC) were first introduced there was almost no market for them. They were pretty much a hobby item. Then came the killer app, electronic spreadsheets. But the first personal computers where pretty much supply push. The market had almost no idea what to do with microprocessors. It's much like the old Henry Ford quote, “If I had asked my customers what they want I'm sure they would have said a faster horse”. One of the many problems that I have with your writing is saying that Economics is just one thing. Clearly with all of the schools and opinions it's not.

Anyway the word market has multiple meanings. One is akin to a space like the Desktop OS space. The other is the idea of a self correcting mechanism. You've conflated the two ideas by using polysimy. Great rhetoric but lousy reasoning.

Mjr1007 wrote:
What was said was they are not self correcting.

Mike replied:
If markets are not self-correcting, then you should be looking at *why* they're not self-correcting. And, in many cases, you'll find it's because of regulations or things like granted monopolies.

Mjr1007 replied:
OK Mike, what regulation or granted monopoly allowed M$ to Monopolize the Desktop OS space? Why is it that Economist, even pseudo-economist tend to ignore anticompetitive behavior as the cause of renting seeking?

Mjr1007 wrote:
I failed to say why my approach was better then an open (free?) market because what I'm proposing actually opens up the market of ideas. Despite the rancor we actually agree on the definition of the problem. Monopoly is the enemy of good management. Granting a monopoly on ideas one of the worse of all. On the other hand Research and Development (R&D) not just Development is the key to progress.

Mike replied:
Again, as I already stated, since the R is so important to the D, anyone who wants to be involved in the D has incentive to fund the R. An understanding of the Coase theorem will help you here... You don't need an artificial construct. The R will get funded, if only because the D needs it.

Mjr1007 replied:
Not getting the Coase reference. Please specify what are the rights and externalities. There was a quote from a previous posting which stated that a high tech exec saw research without an immediate payoff as an expense. The article I posted talked about companies wanting to read about others R and then use it. So a vague reference to Coase really doesn't make a point here.

Mjr1007 wrote:
Compulsory licensing of songs is an obvious example. To stay within the bounds of the Constitution the Congress could simply give 1 day of exclusive use or many years of compulsory licensing.

Mike replied:
Again, history has shown that compulsory licensing distorts the market in unnecessary ways. You keep claiming that this is a better model, but fail to provide any evidence against the wide history of evidence showing that an open market tends to be more efficient.

Mjr1007 replied:
One of your responses was “let the government fund it”. If licensing distorts the market what does government funded research do? If you think the patent examiners are a bunch of know nothings then you ought to try the government Program Managers (PMs). Often it's the case they wouldn't know a novel new idea if it jumped up and bit them on the ass. The safe thing to do in this case is just go with a big name research institute. So you just wind up with more of the same.

Mjr1007 wrote:
Put all patents under compulsory licensing and let the manufacturers license them without there having to be an agreement on what percentage goes to whom.

Mike replied:
And all that does is getting people doing research to get a *patent* not for the sake of development. You distort the market in dangerous ways. If you look closely at the pharma industry today you'll see what happens with the model you discuss. It's not pretty.

Mjr1007 replied:
This show a spectacular lack of understanding on just how basic research works. Why don't you just go back and read what drives Basic Research and how new discoveries are used. Gee this is easy, no evidence no citation just pure opinion. I can see why you prefer this Mike.

Mjr1007 wrote:
BTW this is the first time I had heard of the LTE deal. Nice to know thought that others are on the same track, dare I say, the right track.

Mike replied:
Yikes. It's the first time you've heard of a patent pool?

I'd suggest you do a little research on patent thickets and take a look at how patent pools have worked out historically.

This one will end as a disaster like so many before.

Mjr1007 wrote:
Mike, I'm just going to attribute this to 0300. What was written was this was the first I heard of the LTE deal, not a patent pool. I'm not sure how to make this any clearer.

Now as far as history is concerned. I think it's fair to say at this point it just doesn't matter. Comparing our current post industrial information age with the start of the industrial revolution is probably not the be most useful thing to do. But OK.

One of the underlying reasons for patents, although not stated in the Constitution, is the disclosure of the trade secret for protection. Without patents a strong EULAs could slow progress down. The rate of progress now is so much greater then when these laws were introduced it's almost a joke comparing the two. And let's not forget the rent seeking behavior of the IP holders trying to extend their power. No system is perfect but the question is what are the best way to encourage technological advancement without slowing down products coming to market. Basic Research will be the key to progress it's were orders of magnitude increases occur. No amount of division of labor or market efficiency will do that.

Having the government pick the winners and losers or hoping large companies will get together to fund this sort of research just won't cut it any more. More needs to be done.

Somethings you should stop doing.

Stop equating compulsory licensing with a monopoly, clearly it's not, it's more of a tax then a monopoly.

Stop using rhetoric instead of reason. I would think by this time you would have noticed that dog won't hunt.

Stop making vague statements with reading assignments. If you have a point make it as clearly and concisely as you can. If you have time to respond to the postings then do it right.

Patent Pool

nonsense

"What's wrong with the market mechanism? If someone doesn't want to bring a product to market themselves, then get hired by a company that does, or find an investor and or partner who will build a company around that research.

That's how silicon valley works, by the way..."

Nope, Mikey

Doesn't work this way in this world

You can sue those infringers to oblivion (if you can afford it of course) or you can start your own company to commercialize your invention if you have some entreprenerial talent (and still sue those infringers to oblivion)
There is no other way around

Better stay away from any company which wants to hire you to commercialize your invention - it's a perfect recipe for getting screwed, trust me on this (or read about Bob Kearns)
This is a dog-eat-dog world by korporate design, dude

Re: nonsense

Doesn't work this way in this world

Says the guy who doesn't live or work in Silicon Valley...

Want to try again?

You can sue those infringers to oblivion (if you can afford it of course) or you can start your own company to commercialize your invention if you have some entreprenerial talent (and still sue those infringers to oblivion)
There is no other way around

Actually, there are numerous "other ways around" that have nothing to do with suing anyone. Lots of companies are doing just fine without suing competitors.

In fact, many smart companies recognize that in an emerging market, it's BETTER to have competitors, because it cuts your marketing costs.